Indonesia takes global cues. Sustainability in back seat as economy wins over ecology
Indonesia is taking cues from its major trade partners in the EU and the US which have relegated sustainability to the backseat.
The EU’s Deforestation Regulations, once hailed by campaigners around the world as a game-changing piece of legislation that would help stop deforestation globally, has been dismantled according to The Guardian.
An expert on the EUDR Anthony Harwood, calls it a humiliation for the President of the European Commission, Ursula von Der Leyen, who bowed to US demands.
The EU’s Deforestation Regulations, once hailed by campaigners around the world as a game-changing piece of legislation that would help stop deforestation globally, has been dismantled according to The Guardian.
An expert on the EUDR Anthony Harwood, calls it a humiliation for the President of the European Commission, Ursula von Der Leyen, who bowed to US demands.
Indonesia closes 2025 with rising disasters and stalled environmental reform. Mongabay
There are vital lessons from the EU and US for Indonesia as it looks to clean up a palm oil industry accused of deforestation and corruption.
Deforestation for palm oil, has pushed Indonesia to become one of the highest emitters of global greenhouse gas emissions globally, alongside the United States and China according to Greenpeace.
As far as sustainability is concerned, the Indonesian palm oil industry should consider the current trend of economy over ecology as a short term hiccup. Failure to do so represents a future threat to exports if the demands for sustainability gain favor again from its foreign buyers.
Sustainability a long game
Sustainability is a long game plan which requires commitments that survive the political terms of people like Donald Trump.
As for the sustainability of its palm oil industry, the Indonesian government can undo much of the reputational damage in 2026 as it seeks to seize another five million hectares of “illegal palm oil plantations” this year.
Added to the four million hectares of illegal palm oil plantations confiscated by the Indonesian government in 2025, this means that more than half of Indonesia’s 16.8 mln hectares of palm oil plantations were illegal.
The implications could stun the Indonesian palm oil industry. A Reuters report on the plantation seizures in 2025 found widespread fear among investors and analysts about their future operations and the impact of the crackdown on global supply.
If a second round of plantation seizures by the Indonesian military takes place in 2026, the impact on global palm oil powerhouses including Wilmar International, Sinar Mas Agro Resources (SMART), First Resources and other household names in the Indonesian palm oil industry will be deep for Indonesia's corporate palm oil industry.
The questions now are will a nationalized palm oil industry deliver tax revenues for national development better than corporate industry?
What will Indonesia do with all these illegal plantations operating inside forested areas?
Legalizing Illegal Palm Oil Plantations a Problem
A report from Reuters suggested that Indonesia may turn these illegal plantations back to their legal status as forests.
Indonesia is actively reclaiming vast areas of illegally converted palm oil plantations, seizing millions of hectares and aiming to return them to the state for potential reforestation
Fresh reports from Indonesian media Palm Oil Magazine says this is not going to happen.
Environmental advocates’ hopes that millions of hectares of seized palm oil plantations would be restored to their original forest function are fading. Instead of rehabilitation, the land now risks being “whitewashed” and legalized for business use by state-owned enterprises (SOEs) through changes to forestry regulations.
The controversy intensified after Forestry Minister Raja Juli Antoni issued Ministerial Regulation No. 20/2025, revising rules on forest planning and changes in forest designation and function. The regulation opens the door to the partial release of forest areas for existing palm oil plantations that have been reclaimed by the state.
Turning “illegal” palm oil plantations to “legal” with on the spot legislation is not new in Indonesia. Neither are the accusations of whitewashing illegal palm oil plantations. An earlier effort to reclaim vast areas of illegal palm oil plantations in forest areas under an amnesty program was criticized as whitewashing “the crimes of setting up plantations inside areas zoned as forest, where deforestation, wildfires and land conflicts are rife.”
These accusations could prove problematic for Indonesia’s palm oil industry body GAPKI, which has asked the European Union to recognize the ISPO based on the argument that smallholders risk exemption from the EU market.
The submission notes the significant costs imposed on smallholder farmers across Indonesia, and calls on the EU to exclude smallholders from reporting requirements, and recognise ISPO as a path to compliance under the regulation.
The immediate problem for GAPKI’s submission to the EU is that smallholders in Indonesia are part of the supply chain that have been producing Indonesian palm oil on illegal plantations that may have been exported to the EU.
An in-depth report by Bloomberg on Indonesia’s nationalization of its palm oil industry quoted Indonesian smallholder Rubahan Hasibuan where 2,000 hectares of farmland in his village, owned by roughly 500 families have been seized.
Smallholders like Rubahan Hasibuan challenge the credibility of the ISPO where legality is a major problem for Indonesian smallholders.
Experts on what Indonesian should do to improve palm oil sustainability
It is easy to blame the problems that plague the Indonesian palm oil industry on government policies that changed from one administration to another. This struggle between economy and ecology is not unique to Indonesia but it is highlighted by the threat of orangutan extinctions versus the governments ambitions to bring down the level of poverty.
Critics of the Indonesian palm oil industry like Timothy Workman from Rainforest Action Network continue to favor orangutans over the welfare of Indonesians.
Other critics of the Indonesian palm oil industry have already highlighted new challenges to the sustainability of Indonesian palm oil where the government's plans for self subsistence in Papua has been labeled as "World's largest deforestation" project.
The extent of deforestation in Indonesia's last forest frontier is yet to be confirmed as developments take place in Papua but Jeff Hutton expects it to worsen.
After years of uneven progress, deforestation in Indonesia is poised to accelerate, owing to widespread logging, expanding plantations and mining.
An indicator of future threats against Indonesia's sustainable offerings may well be seen in the current failure of Indonesia's carbon credit scheme, IDX Carbon which is struggling to find buyers.
Experts from different spectrums have expressed the need for Indonesia to take charge of the ecological problems caused by its natural resource industries.
From Ronny P Sasmita, senior analyst at Indonesia Strategic and Economics Action Institution.
Indonesia’s palm oil power is only as strong as its sustainability. The future of Indonesian palm oil will be decided by political choices made today, not by the scale of land cleared yesterday.
A country that controls close to 60% of global supply does not have the luxury of being reactive. Every governance failure, every recurring ecological disaster will inevitably be read by global markets not as a local aberration, but as evidence of systemic weakness.
The path forward is therefore unmistakable. Indonesia must make sustainability non-negotiable, not because Brussels or Washington demands it, but because the country’s own economic and geopolitical ambitions depend on it.
Carl Traeholt, International Project Development Manager at Copenhagen Zoo said as much when he brought up the sustained efforts in Indonesia to reform industry practices on the ground as one that rarely reached global audiences:
"According to Carl, the transformation he refers to goes beyond administrative compliance with certification schemes such as the Roundtable on Sustainable Palm Oil (RSPO) or Indonesian Sustainable Palm Oil (ISPO). What truly matters, he stressed, is whether policies and field practices are delivering tangible benefits for the environment and surrounding communities.
True sustainability, Carl argued, should move beyond compliance toward restoration.
“Certification often stops at compliance. We need to move to restoration,” he said. “Not only minimizing damage, but actively repairing ecosystems that have already been degraded.”
As Indonesia looks to seize more palm oil plantations in 2026, the challenge to its sustainability will depend on whether the beneficiary of these land seizures, state-owned PT Agrinas Palma Nusantara, will take action to prevent a re-occurrence of disasters like the "Sumatra floods" all over Indonesia.
Stay tuned as we monitor the situation on the nationalization of palm oil plantations in Indonesia.
Published January 18, 2026 CSPO Watch
Deforestation for palm oil, has pushed Indonesia to become one of the highest emitters of global greenhouse gas emissions globally, alongside the United States and China according to Greenpeace.
As far as sustainability is concerned, the Indonesian palm oil industry should consider the current trend of economy over ecology as a short term hiccup. Failure to do so represents a future threat to exports if the demands for sustainability gain favor again from its foreign buyers.
Sustainability a long game
Sustainability is a long game plan which requires commitments that survive the political terms of people like Donald Trump.
As for the sustainability of its palm oil industry, the Indonesian government can undo much of the reputational damage in 2026 as it seeks to seize another five million hectares of “illegal palm oil plantations” this year.
Added to the four million hectares of illegal palm oil plantations confiscated by the Indonesian government in 2025, this means that more than half of Indonesia’s 16.8 mln hectares of palm oil plantations were illegal.
The implications could stun the Indonesian palm oil industry. A Reuters report on the plantation seizures in 2025 found widespread fear among investors and analysts about their future operations and the impact of the crackdown on global supply.
If a second round of plantation seizures by the Indonesian military takes place in 2026, the impact on global palm oil powerhouses including Wilmar International, Sinar Mas Agro Resources (SMART), First Resources and other household names in the Indonesian palm oil industry will be deep for Indonesia's corporate palm oil industry.
The questions now are will a nationalized palm oil industry deliver tax revenues for national development better than corporate industry?
What will Indonesia do with all these illegal plantations operating inside forested areas?
Legalizing Illegal Palm Oil Plantations a Problem
A report from Reuters suggested that Indonesia may turn these illegal plantations back to their legal status as forests.
Indonesia is actively reclaiming vast areas of illegally converted palm oil plantations, seizing millions of hectares and aiming to return them to the state for potential reforestation
Fresh reports from Indonesian media Palm Oil Magazine says this is not going to happen.
Environmental advocates’ hopes that millions of hectares of seized palm oil plantations would be restored to their original forest function are fading. Instead of rehabilitation, the land now risks being “whitewashed” and legalized for business use by state-owned enterprises (SOEs) through changes to forestry regulations.
The controversy intensified after Forestry Minister Raja Juli Antoni issued Ministerial Regulation No. 20/2025, revising rules on forest planning and changes in forest designation and function. The regulation opens the door to the partial release of forest areas for existing palm oil plantations that have been reclaimed by the state.
Turning “illegal” palm oil plantations to “legal” with on the spot legislation is not new in Indonesia. Neither are the accusations of whitewashing illegal palm oil plantations. An earlier effort to reclaim vast areas of illegal palm oil plantations in forest areas under an amnesty program was criticized as whitewashing “the crimes of setting up plantations inside areas zoned as forest, where deforestation, wildfires and land conflicts are rife.”
These accusations could prove problematic for Indonesia’s palm oil industry body GAPKI, which has asked the European Union to recognize the ISPO based on the argument that smallholders risk exemption from the EU market.
The submission notes the significant costs imposed on smallholder farmers across Indonesia, and calls on the EU to exclude smallholders from reporting requirements, and recognise ISPO as a path to compliance under the regulation.
The immediate problem for GAPKI’s submission to the EU is that smallholders in Indonesia are part of the supply chain that have been producing Indonesian palm oil on illegal plantations that may have been exported to the EU.
An in-depth report by Bloomberg on Indonesia’s nationalization of its palm oil industry quoted Indonesian smallholder Rubahan Hasibuan where 2,000 hectares of farmland in his village, owned by roughly 500 families have been seized.
Smallholders like Rubahan Hasibuan challenge the credibility of the ISPO where legality is a major problem for Indonesian smallholders.
Experts on what Indonesian should do to improve palm oil sustainability
It is easy to blame the problems that plague the Indonesian palm oil industry on government policies that changed from one administration to another. This struggle between economy and ecology is not unique to Indonesia but it is highlighted by the threat of orangutan extinctions versus the governments ambitions to bring down the level of poverty.
Critics of the Indonesian palm oil industry like Timothy Workman from Rainforest Action Network continue to favor orangutans over the welfare of Indonesians.
Other critics of the Indonesian palm oil industry have already highlighted new challenges to the sustainability of Indonesian palm oil where the government's plans for self subsistence in Papua has been labeled as "World's largest deforestation" project.
The extent of deforestation in Indonesia's last forest frontier is yet to be confirmed as developments take place in Papua but Jeff Hutton expects it to worsen.
After years of uneven progress, deforestation in Indonesia is poised to accelerate, owing to widespread logging, expanding plantations and mining.
An indicator of future threats against Indonesia's sustainable offerings may well be seen in the current failure of Indonesia's carbon credit scheme, IDX Carbon which is struggling to find buyers.
Experts from different spectrums have expressed the need for Indonesia to take charge of the ecological problems caused by its natural resource industries.
From Ronny P Sasmita, senior analyst at Indonesia Strategic and Economics Action Institution.
Indonesia’s palm oil power is only as strong as its sustainability. The future of Indonesian palm oil will be decided by political choices made today, not by the scale of land cleared yesterday.
A country that controls close to 60% of global supply does not have the luxury of being reactive. Every governance failure, every recurring ecological disaster will inevitably be read by global markets not as a local aberration, but as evidence of systemic weakness.
The path forward is therefore unmistakable. Indonesia must make sustainability non-negotiable, not because Brussels or Washington demands it, but because the country’s own economic and geopolitical ambitions depend on it.
Carl Traeholt, International Project Development Manager at Copenhagen Zoo said as much when he brought up the sustained efforts in Indonesia to reform industry practices on the ground as one that rarely reached global audiences:
"According to Carl, the transformation he refers to goes beyond administrative compliance with certification schemes such as the Roundtable on Sustainable Palm Oil (RSPO) or Indonesian Sustainable Palm Oil (ISPO). What truly matters, he stressed, is whether policies and field practices are delivering tangible benefits for the environment and surrounding communities.
True sustainability, Carl argued, should move beyond compliance toward restoration.
“Certification often stops at compliance. We need to move to restoration,” he said. “Not only minimizing damage, but actively repairing ecosystems that have already been degraded.”
As Indonesia looks to seize more palm oil plantations in 2026, the challenge to its sustainability will depend on whether the beneficiary of these land seizures, state-owned PT Agrinas Palma Nusantara, will take action to prevent a re-occurrence of disasters like the "Sumatra floods" all over Indonesia.
Stay tuned as we monitor the situation on the nationalization of palm oil plantations in Indonesia.
Published January 18, 2026 CSPO Watch